HUGO CARPENTER

APRIL 2018

The Story of Schröder

Gerhard Schröder was always an ambitious man. He made no denial of his ambitious nature, describing himself as a “climber” working his way up from a difficult childhood as one of five children under a single mother to the highest office in the land. Schröder’s landmark victory to become chancellor in 1998 showed huge promise for a new, forward-thinking political and economic climate in Germany, yet the results never quite materialised. This article aims to firstly explain Schröder’s chancellorship to a generation who have known Angela Merkel for their political lives, and then to explore the significance of his legacy today.

The 1998 election was an interesting crossroads in post-reunification German politics. The ‘safety first’ attitude espoused by Helmut Kohl was old-school CDU politics in the vein of Adenauer and the Wirtschaftswunder (Economic Miracle), yet Kohl’s popularity had fallen amongst the electorate. The traditional German Mittelstand (middle class) economy and policies of Kohl’s tenure had led to unemployment of 9.2%, according to the OECD, which disproportionally affected the population in former GDR states. In this climate, Schröder looked to be a dynamic, confident candidate who had just swept to victory in Niedersachsen with a complete majority, a rarity in Germany’s coalition-dominated governments. Indeed, Schröder needed to form a coalition with the Greens in order to form a government in the Bundestag, joining forces with the charismatic Joschka Fischer.

Immediately upon starting his term, Schröder encountered problems. He and Tony Blair released a joint statement announcing their policies of expanding the remit of the Left to include business-friendly policies, with the main objective of working with large international firms in order to achieve macro-economic stability across Europe. This Neue Mitte (Third Way) would become one of the defining ideologies of Schröder’s chancellorship. However, Schröder never shared the support and confidence within his own party that Blair was able to rely upon. Another aspect of the Neue Mitte was tax and welfare reform, which did not sit will with many within the SPD, many of whom had supported Schröder due to his campaign promises not to interfere with the welfare system. Fortunately for Schröder and the SPD/Green coalition, in 1999 the CDU was found to have been receiving illegal party funding and shady wire transfers from international bank accounts. The SPD still managed to lose a succession of 6 state elections due to the turmoil following the Neue Mitte manifesto, illustrating the extent of the party in-fighting.

After the 2002 federal election victory for the SPD/Green coalition, Schröder began to develop the ‘Agenda 2010’, a key set of policies which came to define his second term as chancellor. In essence, these policies entailed the implementation of Neue Mitte economics in Germany, promising to support the welfare state through modernisation. In practice, this resulted in reducing funding to the various unemployment and benefit institutions. Another aspect of the Neue Mitte was abolishing the capital gains tax on corporate stocks and shares, making Germany more attractive to foreign investors. However, Schröder’s reforms did not have the intended results. Agenda 2010 failed miserably; his Hartz IV reforms have become notorious in German news and political culture. Schröder’s Germany was running the risk of becoming a mid-tier nation, a Mittelmacht. His principle vision was to fight that trend and establish Germany’s place in the new world order. It is here that the cuts on capital gains tax for shares comes into play: Germany’s Mittelstand economy drew its strength from the individual workers, and transitioning to an economy dominated by large-scale financial economics neglected these individual workers and the Mittelstand principle as a whole. The goal of Agenda 2010 was to modernise and protect the welfare state, but to many amongst the population and to sceptical SPD politicians it seemed like blasphemy. In practice Schröder’s reforms failed. Germany might have launched itself into the 21st century, but this came at the cost of a rise in unemployment and economic stagnation. After the SPD lost the 2004 elections in Nordrhein-Westphalia, Schröder called a vote of confidence (the German Grundgesetz, Constitution, does not allow votes of no confidence) against which he then campaigned in order to trigger fresh elections. Angela Merkel and the CDU/CSU bloc won by only a few thousand votes, a testament to Schröder’s charisma and prowess on the campaign trail. Eventually the SPD went into a Grand Coalition with the CDU/CSU Bloc and Schröder ceded the chancellorship to Angela Merkel.

Schröder’s Forgotten legacy today

The story of the SPD/Green coalition is a complex one, and the events described here barely scratch the surface of 7 years in German politics under Schröder and the SPD/Green alliance. Yet it has huge significance when regarding Germany today and the general trajectory of Germany after the Second World War.

Under Schröder the first German troops since 1945 were sent abroad to conflict zones in the Balkans and Afghanistan alongside other NATO allies. This is not only historically significant, but also represents in part the fulfilment of Schröder’s vision. He was opposed to the German wariness at wielding influence abroad. The new German assertiveness on the international stage was, however, not limited to military expeditions. Schröder was hugely active within the European Union, often joining forces with French President Jacques Chirac in order to support the Euro. The significance of this today is shown by Merkel’s roles within the rebuilding of the EU after the 2008 recession. Schröder laid the foundations for Germany as the EU’s bedrock, economically and socially.

Aside from international relations, Schröder represented a progression in German history. He was the first post-war chancellor to have been born after 1945; a man occupied not by Germany’s past but with its future. Unlike, for example, Willy Brandt, Schröder was not a powerful symbolic figure by any measure within the SPD. His rule was defined by compromise, which eventually led to his downfall. By straying too far from the SPD’s roots Schröder alienated himself from the central psyche of his party, which was naturally an untenable position. His slick, business-friendly style was not compatible with the dream of 1968, and his downfall after the 2004 showed how toxic his image had become. This is clearly put into perspective when compared to Joschka Fischer, who remains beloved despite his involvement with the turmoil of 1968 and the 1970s. Much like Blair, Schröder’s promises soured alarmingly quickly. For, when all was said and done, Germany was left with the Grand Coalition he had originally wanted in 1998. Yet this GroKo was not his: it was Merkel’s. Her domination of German federal politics ever since certainly tarnishes Schröder’s reputation in comparison. Yet Schröder was also a victim of circumstance. His vision was a marriage between the sacred concepts of the post-War welfare state and a modern globalised player on the world stage; a marriage that was not destined to last.

These lessons resonate today. Schröder’s tenure as chancellor is a cautionary tale in compromise and personal vision, contrasting to Merkel’s enduring faith in ‘business as usual’ politics. Gerhard Schröder is often forgotten when discussing modern Germany, yet the symbolism of his chancellorship, and its failure, is closely linked to the economic and political behemoth that is the modern German state. Unlike his predecessors Schröder did not bear the burden of the Second World War, the Cold War or reunification, but one of global political movements. To say he failed is reductive, yet to say he succeeded is naïve. Although often neglected, his importance should never be forgotten.